Analyzing Current Economic Issues / CIA4U – Final Exam

Name______________
Date_____________

Time Breakdown

Section Number of Estimated

Questions Time
Part I: Fundamentals 7

Part II: Firms, Markets and 7

Stakeholders
Part III : Macroeconomics 7

Part IV : Interdependence 5
and Inequality

Mark Breakdown

Knowledge / Understanding 25

Thinking / Inquiry 29
Communication 27

Application 29
Total Marks 110
Part I : Fundamentals – 30 marks

1. How does the concept of scarcity relate to the economic diagram below ? [K2, Inquiry 2]

by Unknown Author is licensed under

2. Give an example of a i) positive statement and a ii) normative statement in economics :

[ K2, C2 ]

3. Model below how a government imposed tax might affect consumer and producer
surplus, by labelling the graph. How might a neo-classical economist use such a diagram
to argue against government intervention ? [ C4, Inquiry 2 ]
by Unknown Author is licensed under

4. Find the equilibrium of price and quantity from the data below, and sketch a graphical
representation : [ K2,C2 ]

Supply ( qty) Demand ( qty) Price $

3 9 1
4 7 2
5 5 3
6 3 4
5. What kinds of issues might a cost-benefit analysis of the Kinder Morgan pipeline raise ,
and what techniques might an economist use to evaluate such costs ? [ Comm, 5 ]

6. If the quantity demanded of i-phones dropped 5% in response to a 10% price increase,

what is the elasticity of the good, and what does this mean ? [ App 3 ]

7. According to the theory of comparative advantage, which country should produce what,
and why ? [ App 4 ]
Canada USA Outputs
400,000 2 .8 million Cars
150 350 Airplanes
Part II : Firms, Markets and Stakeholders – 25 marks

1. Why might a government intervene to block a merger between two large

companies ? [ Inquiry 3 ]

2. How might a company use the following graphical analysis ? [ App 3 ]

3. How might the following diagram be used to analyse consumer preferences ?
[ Inquiry 3 ]

4. Use a supply and demand diagram to illustrate how a price floor could affect an
economy. [ K3, C 3 ]
 5. How might the prisoners dilemma matrix below be applied to firms decision
making ? [ App 4 ]

by Unknown Author is licensed under

6. Use a sketch of a supply-demand diagram to show how either a negative externality

or positive externality may lead to market failure and an under-estimate or over-
estimate of true value. [ Inquiry 2, K2, C2 ]
7. Based on some of the content and techniques you have seen on this course , what
careers do you think might suit the skills and training of an economist ? [ App, 4 ]
Part III : Macroeconomics – 26 marks

1. Draw a diagram below to model how cutting taxes could increase aggregate
demand and close a recessionary gap. [ Comm 3, K2 ]

2. What is the difference between Fiscal and Monetary policy ? [ K2, Inquiry 2 ]
 3. Label the diagram below to model how increasing government spending may
inadvertently cause inflation : [ Comm 3 , K1 ]

4. What is the Real GDP increase after price adjustments ? [ K2 ]

2016 Qty produced 2016 Price per unit 2017 Qty 2017 Price per
produced unit
Maple Syrup 18 million gallons $11 20 million $12
gallons
Beaver pelts 6,000 $50 5,149 $67
Lumber 72,000 $200 72,000 $195

5. Based on this simple basket of goods, what has been the inflation rate ? [ K2 ]

2016 Price 2017 Price

Eggs $2.99 $3.19
Bread $3.89 $3.99
6. Explain how and why a government might implement an expansionary monetary
policy, with what possible side-effects. [ App 5 ]

7. Why might an economist assert that GDP, despite its limitations, is still the best
indicator of quality of life in a region ? [ Inquiry 4 ]
Part IV : Global Interdependence and Inequalities – 25 marks

1. Use a supply and demand diagram to show how a currency could appreciate if it had a
floating exchange rate. [ Comm 3 , App 3 ]

2. What are some commonly given explanations of why some countries are poor whilst
others are rich ? [ K5 ]

3. What economic and empirical arguments are there for the assertion that poorer nations
need ;‘Trade, not Aid’ ? [ Inquiry 3 , App 3 ]
4. What are some advantages and disadvantages of trading bloc agreements like NAFTA ? [
Inquiry 4 ]

5. Who might globalization help, and who might it hurt from an economic stand-point ?
[ Inquiry 4 ]